Leasing is the number one vehicle funding mechanism for fleets and, while this year’s FN50 highlights growth across the UK’s 50 largest companies, look below the surface and the real expansion is among a rapidly growing force of businesses – vehicle brokers.
Often maligned in the past as bedroom-based cut-price operators, today’s leading brokers are, in reality, professional organisations offering a cradle to grave service to fleets of all sizes – including blue chip companies.
Effectively the broker market has split into two – perhaps in part fuelled by Financial Conduct Authority regulatory changes.
There are those that lead on vehicle price, largely targeting the SME sector, and others with a desire to attract a corporate client base on a one-to-one relationship via a sole-supply partnership.
The latter group is winning significant fleet business.
Given the brokers offer all the in-life vehicle services expected of a leasing company – fleet, maintenance, risk and accident management and short-term hire etc. – the only difference is that they do not carry residual value (RV) risk.
Brokers back the RV risk off to a traditional leasing company and it is this trend that is fuelling the growth of the latter in this year’s FN50 report.
Indeed, the UK’s largest vehicle leasing company, Lex Autolease (381,833) is honest enough to admit that the broker channel “has been a major contributor” to its fleet growth in recent years.
Vehicle RVs have been strong for a few years on the back of UK economic recovery, but there are warnings of a softening and that will potentially impact on leasing company profits and spark concern in boardrooms.
As a result, it can be argued that the broker business model is more sustainable than that of the leasing sector as they do not carry any RV risk.
What’s more, because brokers use a panel of funders, a fleet can obtain ‘best value’ on any specific day.
Decision-makers in fleets of all sizes will ignore the growth of the professional broker sector at their peril.
Indeed, they might be surprised at what top brokers’ offer – competitive pricing and quality service.
By Paul Hollick chairman of the ICFM